California Electricity Bills Are Skyrocketing

Electricity bills in California have been rising in recent years, and have doubled over the past decade as utilities invest more in wildfire prevention and transmission lines to keep up with growing renewable energy production.

As utilities invest billions of dollars to make their grids more resilient, they pass on higher costs to consumers.

So CaliforniaRNIA currently has the second highest average electricity bill in the United States, second only to Hawaii.

“Unsustainable” growth

California wants to rapidly transition away from fossil fuels and make its grid more resilient, but these actions show the flip side of greening the grid — the cost of generating power could fall rapidly while transmission and distribution costs rise, leading to higher spending by utilities.

The spending increase is passed on to consumers through investor-owned utilities: Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. As a result, California’s electricity bills have risen so much in recent years that in some places, the electric bill is more than the cost of rent, The Wall Street Journal reports. reports in the featured article.

According to the California Public Utilities Commissioner’s Office of the Consumer Advocate, the bill increases are “unsustainable.”

In the latest report on electricity rates for the second quarter of 2024. Report Last month, the Office of the Ombudsman tracked changes in residential electricity rates in areas served by Pacific Gas and Electric (PG&E), San Diego Gas & Electric (SDG&E) and Southern California Edison (SCE) through July 1, 2024.

The report found that California’s electricity bills have increased over the past few years due to increased power usage from appliances such as air conditioning, as well as higher overall electricity prices.

Since January 2014, average residential utility rates in PG&E’s service area have increased by 110%, in the SCE area by 90%, and SDG&E rates have increased by 82%.

According to the Office of the Commissioner for Human Rights, the main factors influencing the statewide rate increases were investments in mitigating the effects of wildfires, investments in transmission and distribution, as well as incentives to install solar panels on roofs, known as net energy billing.

As noted, household electricity rates have increased significantly since 2014, outpacing inflation.

It’s no wonder that nearly 1 in 5 households is behind on their energy bills, according to the bureau. A combined 18.4% of customers at the three investor-owned utilities are behind on their energy bills.

Changes in electricity charges

This year, California changed the way utilities charge for electricity and is moving from net energy metering to a net metering rate for residential solar projects. These regulatory changes affect residential solar installations and are set to change the way electricity is billed starting next year.

The move to a net-settlement tariff in California dragged down the overall U.S. residential solar market, which in Q2 2024 saw its lowest quarter since Q1 2022, at 1.3 GWdc, down 25% year-over-year and 18% quarter-over-quarter.

“While slowdowns are occurring across the country, these declines were largely driven by California, where quarterly installations have declined over the past two quarters as NEM 2.0 projects are implemented and the state transitions to a net metered rate,” the Solar Energy Industries Association (SEIA) said in its latest quarterly report report.

Another significant change is that starting next year or in 2026, California utilities will charge all customers a flat monthly fee of up to $24.15, while reducing fees for each kilowatt of electricity used.

California Public Utilities Commission (CPUC) says that the new billing structure “lowers average electricity bills for lower-income households and those living in regions most affected by extreme weather events, while accelerating California’s transition to clean energy, making electrification more affordable for all.”

The electricity rate will be reduced by 5 to 7 cents per kilowatt-hour for all residential customers, making electrification of homes and vehicles more affordable for everyone, regardless of income or location, because the cost of charging an electric vehicle or using a heat pump is lower.

However, critics of the new billing structure say it will penalize customers living in small homes and using relatively little electricity, as the lower rate per kWh will not compensate for the new fixed fee.

The question remains what impact the new billing structure will have on California customers and whether it will lead to the expected mass electrification of homes.

A total of 78% of Americans They are worried about rising energy bills, an exclusive CNET Money study found. About 80% of U.S. adults across all regions, including the Northwest, Midwest, South and West, said their finances have been hit by rising home energy costs, according to questionnaire.

California leads the U.S. in solar and battery installations, but the costs of making that energy available to consumers have skyrocketed as the power grid needs to be expanded, modernized and protected.

Author: Tsvetana Paraskova for Oilprice.com

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